As a kind of high moisture organic solid waste, herbal medicine waste (HMW) is a carbon-neutral resource. This work used the response surface method, the central composite design (CCD), to explore the optimal conditions of the HMW HTC process. Based on the influence of secondary char (SC) on the properties of hydrochar (HC), the formation mechanism of SC was explored by analyzing the physical and chemical properties of HC, primary char (PC) and SC. By using the CCD, the number of experimental groups was reduced from 125 to 20, which significantly reduced both the time and economic cost. A reliable response model was established, and the optimal response values for each model were obtained. The main components of SC were esters, organic acids, and phenols. It was mainly formed through chemical reactions such as the hydrolysis and condensation of hemicellulose, cellulose, and soluble lignin. Combustion characteristic analysis showed that SC would reduce the peak temperature of the first weight loss of HC combustion and increase the overall reaction rate of combustion. Further, the SC was analyzed in detail. The results showed that HC was a solid char formed after SC, in the form of amorphous solid, attached to PC. SC on HC would affect the physical and chemical properties of HC. Therefore, SC was a factor that must be considered when using the hydrothermal carbonization method for high-moisture biomass high-value utilization. The mechanism of SC generation was proposed in the study.